HONG KONG • E-commerce conglomerate Alibaba, handset maker Xiaomi and WuXi Biologics will enter Hong Kong's Hang Seng Index next month, the benchmark's publisher announced yesterday.
Alibaba and Xiaomi, along with delivery platform Meituan Dianping, will also join the H-share Hang Seng China Enterprises Index, which represents Chinese companies listed in the city.
Changes to both indexes are effective Sept 7.
About $19.7 billion of assets under management in exchange-traded products was linked to the Hang Seng Index, with another $5.4 billion tied to the H-share index as of last month, the index provider said.
The Hang Seng Index will drop Sino Land, Want Want China and China Shenhua Energy, while Sinopharm, BYD and Citic Securities will leave the H-share index.
The long-awaited inclusion of tech giant Alibaba marks a milestone in one of the biggest revamps in the exchange's 50-year history.
It comes as the Hang Seng Indexes unveiled the first major changes under new rules to allow dual-class shares and secondary listings.
The embrace of benchmark-beating technology companies is considered an overdue move for an underperforming gauge that is overstuffed with banks and financial stocks.
The Hang Seng Index is down 11 per cent for the year, compared with a 13 per cent gain for China's CSI 300 Index and the Nasdaq Composite's 23 per cent rise.
Its compiler recently launched a new measure focused on China's tech giants to provide investors better access to their increasing sway in the city's equity market.
"The inevitable trend is for Hong Kong's equity benchmark to lose more local features and represent more of the Chinese economy," said Mr Jackson Wong, asset management director at Amber Hill Capital. "Adding these companies will help it better reflect changes in the city's equity market."
At least 26 companies out the 50 Hang Seng members generate the majority of their revenue from the mainland.
More listings of Chinese technology firms are in the pipeline. Listing closer to home has become more attractive as tensions between Washington and Beijing threaten to curtail Chinese companies' access to US capital markets.
Dual-class and secondary listings will each be subject to a 5 per cent weighting cap. Dual-class shares were long blocked from listing in Hong Kong due to concern over unequal voting rights until Xiaomi Corp's debut in 2018.
Alibaba joined the bourse last year after a US$13 billion (S$17.8 billion) secondary listing. Its stock has gained around 18 per cent in Hong Kong since Hang Seng Indexes unveiled in May the new listing rules that would make it eligible to join the benchmark.